Supply Chain Horror Story

In his excellent reference ‘The Lean Toolbox’ ( a must read for any aspiring Lean student or practioner wanting a comprehensive review of Lean basics), John Bicheno outlines a number of supplier management approaches, including obviously preferring quality over quantity, developing long-term collaborative relationships, encouraging joint improvement activities, vendor-managed inventory and collaborative planning forecasting and replenishment. All good basic supply chain best practice.

One he obviously missed out on however is highlighted in a French newspaper this morning. It seems that a number of suppliers of the electronics industry were recently told by a major manufacturer that, given that electronic invoicing was being imposed on them, they would be expected in exchange to pay 1200 euros given that their photocopying and printing costs were going to be reduced.

These companies form part of the 7400 French companies who are using an arbitration process put in place by the governement supposedly to help the smaller firms during the current economic period. I doubt if it was meant to face up to blatant stupidity however. What is interesting is that the 7400 companies currently concerned by this process is made up of 47 individual cases… and 14 collective cases. That’s an average of over 500 per group.

What is happening is that, requiring the cover of anonymity, the small boys are taking shelter behind the industry federations to ‘gang up’ on the bigger players. And the 14 collective cases could only be the tip of the iceberg – many conflictual situations are resolved only after the threat has been made, but before any action is taken.

Whether these figures say more about the state of customer-supplier relations or the more general specificities of the French culture is not easy to determine. And it is clear that, under the cover of anonymity, it is much easier to fight back, especially with an elected federation wishing to show its clout.

However, I shall not be proposing to John B that the 1200 euros is used as an example of the best practice of ’sharing cost savings’. This one belongs a lot more firmly in the Horror section.